On May 19, President Trump issued an executive order directing federal financial regulators to review regulations, supervisory practices, and application processes affecting fintech firms. The order argues that existing frameworks may create unnecessary barriers for nonbank financial technology companies, particularly when it comes to accessing the payment system and partnering with regulated banks.
The directive covers a broad range of businesses. It defines a “fintech firm” as any nonbank company that uses technology to provide or support financial products and services—including payments, lending, brokerage, custodial services, and digital asset activities. That definition is intentionally wide, the order notes, to capture the full scope of innovation in financial services.
Regulators are now tasked with identifying ways to streamline oversight while still maintaining safety and soundness, consumer protection, and financial stability. This directive does not mandate specific changes. Instead, it sets a process: agencies must report back within a set timeframe with recommendations for reducing regulatory friction.
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What the order asks regulators to do
The executive order lists several areas for review. These include the application process for charters and licenses, supervisory expectations for fintech partnerships with banks, and rules around access to payment systems like FedNow and central bank services.
It also calls for a look at how existing regulations treat digital assets. This directive suggests that some rules written for traditional finance may not fit companies that rely on blockchain or other distributed ledger technologies. This could open the door to more experimentation in the crypto space, though it does not spell out new policies.
Another focus is on “pass-through” or partnership models, where fintechs operate under a bank’s charter. Recent enforcement actions against banks for allegedly lax oversight of fintech partners have made such arrangements more complicated. The directive asks regulators to consider whether those actions have created unintended barriers.
Reactions and concerns
Industry groups welcomed the order. The Financial Technology Association said it appreciated the administration’s recognition that outdated rules hold back competition. But some consumer advocates are more cautious. They worry that pushing for faster approval of fintech applications could weaken oversight, especially if safety and soundness reviews are rushed.
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One such group, the Center for Responsible Lending, declined to comment for this article. However, past statements from the organization have stressed that nonbank lenders often operate with less regulatory scrutiny than banks, and that expanding their access to the payment system needs careful guardrails.
A shift in tone from the previous administration
The Biden administration had pursued stricter oversight of fintechs, particularly around buy-now-pay-later products and bank-fintech partnerships. The Trump order signals a different approach—one that prioritizes reducing regulatory burden to encourage innovation. It does not directly reverse any existing rules, but it sets a tone for agencies to be more permissive.
Observers note that the order’s impact will hinge on implementation. The Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Consumer Financial Protection Bureau are all likely to be involved. Each agency has its own culture and priorities, so responses may vary.
One area to watch is payment system access. The Federal Reserve has been expanding its instant payment service, FedNow, and has faced pressure from fintechs to allow direct participation. Currently, nonbanks must go through a sponsoring bank, which adds cost and friction. It may push the Fed to reconsider its membership rules.
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The directive also touches on chartering. The OCC has offered a special-purpose national bank charter for fintechs, but it has been challenged in court and struggled to attract applicants. This directive could encourage the OCC to revisit the terms of that charter, or design a new one.
For digital asset firms, this directive is a mixed signal. It explicitly includes them in the definition of fintech and asks for a review of how they are regulated. But it does not provide the kind of clear regulatory framework that many crypto companies have been seeking. This directive is more about process than outcome.
Still, the overall direction is clear. The executive branch wants federal financial regulators to make it easier for fintech companies to operate. Whether that will happen without compromising consumer or systemic protections is the open question. The next few months, as agencies begin their reviews, will provide the first hints of an answer.
